Why Isn’t the Conficker Threat on FCC’s Radar? — Open Internet’s Growing Security Problem — Part VII
April 13, 2009
Why is one of the most-serious identified internet/cybersecurity risks currently affecting the Internet and network operators not on the FCC’s radar screen?
- More specifically, why does a search of the FCC’s website for the term “conficker” return zero results? (see below)
Search Results
A Google search on “conficker”returned 4.86 million results.
According to Wikipedia, “Conficker” is the most widespread computer worm since 2003 and “the worm has been unusually difficult for network operators and law enforcement to counter because of its combined use of advanced malware techniques.” The Conficker worm first appeared 6 months ago.
Spamfighter recently called Conficker “the most wicked and biggest threat to Internet security.”
Please watch this excellent CBS News video (2 min 43 sec.) explaining what conficker is and how it is morphing into a highly sophisticated identity theft program.
- If you want to see if your computer is infected by the conficker worm, the video suggests a website, “conficker eye chart,” that can tell you if your computer is indeed infected by the conficker worm.
- What is especially insidious about the conficker worm is that it is so hard to get rid of. It also blocks access to over 100 Internet security sites and can even prevent one’s computer from being turned off.
Considering how serious and pervasive the conficker Internet/cybersecurity threat is to consumers, it is surprising that this clear and present danger appears to not be on the FCC’s consumer protection radar screen.
Previous parts of the series on: “The Open Internet’s Growing Security Problem” can be found here: Parts: I, II, III, IV, V, VI.
The open Internet’s inherent vulnerability to bad actors made the front page of the Wall Street Journal today in an important-to-read article: “Electricity Grid in U.S. Penetrated by Spies.”
Now we better can much better appreciate why Senate Commerce Committee Chairman Rockefeller is so concerned about cybersecurity and committed to making protection of the Nation’s critical cybrastructure a much more urgent priority for the Internet.
The WSJ article hit the core internet problem on the head in the article — its a lack of accountability:
- “It is nearly impossible to know whether or not an attack is government-sponsored because of the difficulty in tracking true identities in cyberspace.”
This problem in this article spotlights why cybersecurity and online safety are very real and pressing problems on the Internet today. It is surprising and alarming why there is not as much public focus on the very real problems of the Internet as there is on potential unproven Internet problems.
FreePress Concedes Broadband Is Not A Duopoly
April 6, 2009
FreePress in petitioning the FCC to apply its Broadband Principles to wireless (because they currently do not apply to wireless) effectively has conceded that broadband is not the duopoly market they have long alleged, but is a competitive marketplace.
- This is a fundamental concession of fact and a belated recognition of market reality by FreePress, the leading advocacy group pushing for net neutrality. Free Press previously had maintained that it was a lack of broadband competition and consumer choice that justified the imposition of new net neutrality legislation/regulation.
- Given FreePress’ official wireless petition, FreePress can no longer credibly maintain that the four national wireless broadband services (Verizon, AT&T, Sprint and T-Mobile) are not competitive substitutes to cable modems and DSL/fiber now that FreePress argues that wireless and cable-DSL/fiber are effectively equivalent services for regulatory purposes.
- Intended or not, FreePress has effectively eviscerated its own longstanding policy case, legal justification, and political argument for mandating net neutrality by abandoning the factual predicate for their case, justification and argument.
- While FreePress may not appreciate the legal and policy precedent significance of the Supreme Court’s Brand X Decision and the FCC’s 5-0 Broadband Policy Statement, the FCC, and the three branches of Government certainly do.
- The FCC stated that information service providers, i.e. broadband, “are not subject to mandatory common carrier regulation under Title II.”
- If FreePress is no longer challenging the underlying premise of broadband competition which is the foundation of current law, and also the Court/FCC’s interpretation of it — what is FreePress’ new rationale/justification warranting new net neutrality regulation? They have not provided a new one.
- In short, to warrant change in policy, precedent, or law, there needs to be a legitimate, supported and defensible rationale/justification. FreePress no longer has one.
- Public WiFi spectrum may require no permission or payment to use, however it offers no security or privacy protections for users and there is minimal recourse for quality of service, range, coverage, speed, capacity, security, privacy problems — if and when they do arise.
- On the other hand, competitive, private WiFi services and commercial wireless broadband services do require permission and payment to use. They also spell out the benefits/limitations in detail in a contract’s terms-of-service — covering among other things commitments of quality of service, range, coverage, speed, capacity, security, privacy, value-added features, etc.
- The reason wireless broadband services exist and flourish is that they offer a very different value proposition than free public WiFi. Consumers are willing and free to choose which providers’ value-added mix is the one they want.
- What is the new rationale/justification for net neutrality regulation now that the leading advocate for net neutrality has effectively conceded broadband is a competitive market and not a duopoly?
- Why shouldn’t consumers and businesses be free to buy and sell wireless services under contract in a competitive marketplace like they have been able to for over 15 years?
Analytically, there is another big logic problem with FreePress’ petition. It effectively argues that public WiFi use over free unlicensed public spectrum is, and should be, the legal/regulatory equivalent of private commercial wireless use — under a contracted service agreement — over private-licensed spectrum that was purchased at auction for billions of dollars. Simply, they try and argue that whatever one can do on public WiFi, one should be able to do on commercial wireless networks — without any legitimate justification.
In sum, FreePress’ new petition to apply net neutrality to wireless, spotlights two important questions:
Lessons from Sweden’s Illegal File-Sharing Crackdown
April 4, 2009
Wow. Daily Internet traffic in Sweden immediately fell more than 40% after a new Swedish law went into force cracking down on illegal file-sharing. The new law obligates ISPs to to report the IP-addresses of suspected copyright violators to copyright owners.
- Per an AP story: “Statistics from the Netnod Internet Exchange, an organization measuring Internet traffic, suggest that daily online activity dropped more than 40 percent after the law took effect on Wednesday. Henrik Ponten of the Swedish Anti-Piracy Bureau welcomed the plunge in Internet traffic as a sign that file-swappers are reducing their activity for fear of getting caught. “There’s no other explanation for it,” he said.”
Seldom is there such glaring evidence of direct cause and effect between a policy-change and behavior-change on the Internet. To the extent that this initial effect is lasting and proves applicable to other nation’s circumstances, what can we learn from this Swedish precursor/example?
Lesson 1: It proves people act more responsibly on the Internet when there is an increased liklihood of getting caught and prosecuted for illegal behavior. More accountability equals more deterrence.
Lesson 2: It may turn out to be much cheaper and more effective for the U.S. to simply enforce copyright law than to continue overbuilding bandwidth capacity in order to keep pace with the near bottomless bandwidth appetites of the very small minority of users that are serious illegal file-sharers.
Lesson 3: To the extent that current demand for bandwidth speed and capacity is being largely driven by illegal file-sharing activity, simply enforcing the law could enable network investment that is currently being diverted to cope with rampant illegal traffic, to be re-allocated to accelerate broadband penetration, speed and capacity for legitimate use and productive economic activity.
Lesson 4: If much of the tension over net neutrality comes from the necessity for reasonable network management of the congestion generated by illegal file-sharing, lessening the congestion caused by illegal file sharing through enforcing copyright law, would logically lessen tensions and potential problems between net neutrality and reasonable network management. Curing a cause of a problem is superior to putting band-aids on a symptom.
Lesson 5: Sweden’s success proves the “wild-west” bad side of the Internet can be brought more under more control, if there is simply a will to enforce the rule of law and respect for property.
Lesson 6: Subscription-online-video business models can be viable and compete with advertising-online-video business models to the extent that the rule of law and respect for property is enforced.
Lesson 7: Any future efforts at net neutrality legislation or FCC regulation will likely have to deal with the thrust of the Swedish example, because it basically was embodied in the proposed Feinstein Senate Amendment to the economic stimulus package, which proposed that the Federal Government “shall allow for reasonable network management practices such as deterring unlawful activity, including child pornography and copyright infringement.”
Lesson 8: To the extent that the FCC’s National Broadband Strategy examines and seeks all alternatives to maximize the penetration and affordability of broadband investment and deployment, Sweden provides an example of the many broadband maximization benefits of better enforcement of the rule of law.
In sum, the most expensive and least effective broadband strategy may be not enforcing existing law.
Skype’s Anti-competitive Uneconomics
April 2, 2009
There are two primary problems with eBay-Skype’s attempt to get the Government to force competitive wireless providers to carry Skype’s free communications app under the guise of wireless net neutrality and Internet openness; first, it is wildly uneconomic, and second, it is anti-competitive.
- The issue has surfaced in the news (USAToday, WSJ) as Apple enabled a Skype app on the iphone for use on free public WiFi networks, but not on the iphone’s commercial network provided by AT&T; and again when Google’s Android banned a tethering app because it violated T-Mobile’s terms of service as reported by CNET.
I. Skype’s .2% Uneconomics
What is uneconomics? Just what the term implies, not economic, unsustainable… arbitrage.
Skype, has long been seeking a government ruling that its free communications app should be usable on its competitors’ commercial wireless networks with no payment necessary by Skype users or payment by Skype to wireless providers for providing Skype with commercial network services. Its justification has been its interpretation of net neutrality and the FCC’s Broadband Policy Principles, that Internet openness should mean Skype should be able to be used on commercial wireless networks without permission from, or payment to, wireless providers.
Let’s unpack the core microeconomic numbers behind Skype’s uneconomics.
- At the end of 2008, Skype had 405 million users that generated $550m in revenues — generating $1.36 per user per year, or 11.3 cents per user per month in revenues (RPU).
- $550m/405m = $1.36… $1.36/12 = $.113
- At the end of 2008, according to CTIA, the U.S. wireless industry had ~270 million subscribers that generated ~$151 billion, and had average revenue per user of $50.07 per month (RPU). (Since 2000, wireless subscribers monthly bills have remained roughly flat while minutes of use have increased over 700%.)
- On that revenue base, the industry:
- Invested $21.1b in infrastructure/spectrum in 2008, for a total cumulative capital investment since inception of $265b;
- Provided 268,528 direct jobs that pay significantly above the national average comparables (this is an increase of 46% or 84,079 jobs since 2000); and
- Contructed and operated 242,130 cell sites (this is an increase of 132% or 137,842 since 2000).
- On that revenue base, the industry:
- Now let’s compare the business/economic models of Skype vs. wireless providers.
- Skype generates $.113 in RPU to competitive wireless carriers $50.07.
- That means competitive wireless carriers produce 443 times more RPU than Skype.
- That also means Skype’s RPU is .2% of wireless providers’ RPU.
- Skype generates $.113 in RPU to competitive wireless carriers $50.07.
- For illustrative purposes only, lets now assume Skype’s .2% uneconomics were somehow forced on the U.S. wireless industry (which already is arguably the most competitive in the world)and Skype’s business/pricing model became the new business model and pricing point at which U.S. wireless providers had to offer services. Looking at it another way, if Skype’s business model became the Government’s new economic benchmark to beat, and we take Skype’s .2% uneconomics to its logical extreme, that would mean a 99.8% reduction in wireless:
- Revenues from $151b to $300m, a reduction of $150b from the economy, much more with a normal macroeconomic multiplier; and
- Employees from 268,528 to 537, a reduction of 267,990, much more with a normal macroeconomic multiplier.
- For those who think this comparison is extreme, it is not, I was actually generous to Skype.
- The comparison/ratio is actually about four times worse for Skype, because for the comparison above, I attributed all of Skype’s meager revenues to the U.S. when eBay reports that only 20% of Skype’s revenues are actually generated in the U.S. ($110m of 550m). (See page 9 of this eBay release.)
The point of this illustration is to spotlight the extreme uneconomics of forcing Skype’s Internet arbitrage business model on the competitive commercial wireless industry.
II. Skype’s Anti-competitive Problem
In proposing that wireless economics should be mandated to adapt to Open Internet uneconomics where the expectation and right is not to have to get permission from anyone or pay anyone to do something on the Internet, Skype is basically taking a public policy position that is anti-competition policy, and hence logically anti-competitive.
- To the extent that the FCC’s most recent data and assessment of the wireless industry is even remotely accurate, the U.S. enjoys one of the most competitive wireless markets in the world.
- It is still attracting over $20b in annual captial investment and is still growing and adding products and services all the time.
In proposing .2% uneconomics, Skype is really proposing a system that is not competitively economic or sustainable.
- The only way Skype’s proposal could work is if the Government reversed longstanding bipartisan policy in support of competition and replaced it with a government utility model, which would require very heavy governmental subsidization.
In sum, the point of this analysis was to expose the economic irrationality and unworkability of imposing Skype’s vision and economic/business model of an Open Internet on the U.S. wireless industry.
- At core, Skype’s vision is uneconomic and anti-competitive.
